You don't need to work in the building environment or technology field to know that data center development is growing exponentially. As artificial intelligence (AI) moves from subtle possibilities to everyday operational tools, and the demand for cloud applications continues to increase, data centers remain one of the fastest-growing sectors within the building environment.
According to a study conducted by RLB earlier this year, operators expect to have more than 65% of their data center capacity in operation by 2024.
However, the same study shows that supply chain shortages and disruptions are posing a real risk to this momentum, with 35% of operators reducing the number of planned developments and 57% of contractors rejecting projects due to supply chain constraints.
However, as one of the world’s leading data center consultancies, we know that the demand for data centers will not diminish. The challenge is not how to limit digitalization, but how to procure and deliver data centers more sustainably.
Five key considerations for building smarter, higher-quality data centers
1. Full lifecycle procurement strategy: Due to the fast-paced nature of the data center industry, procurement strategies are usually developed based on lessons learned from the latest projects or from the previous working methods of various suppliers.
There is an opportunity to build a procurement strategy that spans the entire project lifecycle, starting from the entire data center ecosystem (from designers, engineers, contractors, and consultants) and forming true best practices throughout the entire project lifecycle.
A scripted approach that combines contracting and integrated project team deliverables, providing clear KPIs for all parties, clearly moves toward the common goal of project success, rather than the often isolated procurement approach.
2. Effective planning and risk mitigation: Electricity demand is one of the biggest risks in our industry and could slow growth rates, as we are increasingly seeing longer periods of pre-construction and development.
However, have we made the right use of this time to mitigate risks in advance, better define design and construction methods, develop risk identification and planning strategies, and enter into appropriate contracts to effectively manage and transfer risks or get to market early?
Do we have clear KPIs to drive project success? If we can use this time more effectively, pre-construction activities can optimize project delivery, ensure cost certainty and place orders early, and increase off-site manufacturing, with the goal of reducing overall construction schedules and getting the project to service faster.
3. Improve pipeline visibility: Effective advance planning benefits the industry by helping to put the right resources in the right place at the right time. This visibility provides clearer planning metrics for equipment delivery, support cost certainty, and production, and enables a clear understanding of wait times or management that supports reordering to effectively respond to market demands.
Furthermore, effective recruitment and training for long-term pipelines will enable us, as an industry, to increase the quantity and quality of capable and experienced personnel within the sector.
4. Supply chain availability: Establishing partnerships with suppliers helps ensure pipeline delivery and improves cost certainty through the Owner Provided Contractor Installation (OFCI) procurement approach, as this reduces GC racking when procuring equipment.
Furthermore, this provides end customers with greater oversight and accountability, while promoting predictability in supply and construction through a centralized delivery system that employs a customer-driven procurement strategy.
5. Cross-industry collaboration: In the post-delivery period, there is often a need for continuous push to respond to customer needs and for all parties on the project team to implement improvements within their respective disciplines, thereby limiting the ways of collaboration to learn lessons and achieve best practices for the future.
The Future of Data Center Development
Post-delivery integration allows project teams to share the pros and cons, provide constructive feedback, and engage in self-reflection to ensure everyone works together to improve the project delivery cycle and implement long-term sustainable change that benefits the broader product portfolio delivery.
Of course, this requires maintaining a balance across different regions and flexibility for different markets to ensure successful delivery.
I was recently invited to a data center industry roundtable and witnessed this collaboration firsthand. As I listened and participated in the discussions, I realized that we are a dynamic industry, a change-leading industry, and an industry that can remain agile in the face of change.
As demand in our industry continues to grow, we must adapt to that demand at a pace that keeps pace to ensure we don’t fall behind in delivery.
